Merchants Bonding Company - Annual Report 2022

2022 Financial Highlights

Direct Premium

Loss Ratio

Surplus

SFAA Market Share

Contract Production Highlights

$ 140.7 million

Premium

+ 27 %

Premium Growth

1,276

New Accounts

$ 26.3 million

Premium from
New Accounts

3,522

Submissions

$ 123 million

Premium from Leaderboard
Surety Elite Program

+ 33.1 %

Premium growth from Leaderboard
Surety Elite Program

Specialty Solutions Production Highlights

$ 8.5 million

Premium

+ 1,659.2 %

Premium Growth

170 %

Goal

423

New Accounts

840

Submissions

$ 5.1 million

Premium from SBA

$ 2.8 million

Premium from Subdivision

Commercial Production Highlights

$ 48.4 million

Premium

+ 11.2 %

Premium Growth

$ 30.7 million

Premium from
New Bonds

$ 27.4 million

Premium from Pacesetters
Surety Elite Program

+ 25.6 %

Premium growth from Pacesetters
Surety Elite Program

Agencies Achieving Higher
Pacesetters Status

+ 15 %

Key Agency Relationships (from 219 to 252 agencies reaching $25,000 or more)

The
Merchants
Commitment

The strategic planning process that played out across 2022 captured the unique intersection of Merchants’ past, present and future and resulted in an evolved purpose and vision that can always serve our company and guide its growth.

Purpose

To be the most trusted team in surety with a courageous culture.

Vision

To become twice the enterprise through innovation and responsible growth.

Mission

To provide common sense solutions, first class experiences for every relationship, and an engaging culture for all associates to achieve long term, profitable growth.

Values

We value excellence, integrity and continuous improvement in all that we do.

We value an inclusive culture that inspires us to explore new ideas.

We value surpassing expectations by delivering a first class experience.

We value a positive and collaborative workplace through trust, loyalty and respect.

We develop potential through learning, involvement and the pursuit of opportunities.

We value balancing the needs of the company, our associates and their families.

We support our communities.

We celebrate and have fun!

Innovation & Responsible Growth

Innovation & Responsible Growth remain at the core of Merchants’ evolved vision, as the drivers of our now infinite goal.

New & Improved Bond Programs

Insurance Program Bonds Introduced

Merchants began offering Insurance Program Bonds (IPBs), providing a cost-effective solution to meet the collateral requirement for loss sensitive insurance plans.

+ 47 %

Premium Growth

Bond Program Production

2022 results show the enthusiastic reception of these bond programs introduced in 2021.

RAP

+ 66 %

Premium Growth

Customs Bonds

+ 1,672 %

Premium Growth

NCP Bonds

+ 728 %

Premium Growth

Increased Capacity

Merchants continues to expand by adding 7 new locations and 12 additional underwriters.

OFFICE LOCATIONS

Telemarketing

Expansion via telemarketing continued in 2022.

3,000 +

Agencies Telemarketed

157

New Agency Prospects Qualified

$ 893,000

Premium from Telemarketed Agencies

Continuous Improvement

E-Bonding Growth

% of Contract GIAs Issued Electronically

Year	Progress
2021	70%
2022	90%

E-Signatures on Commercial Bonds

Year	Progress
2021	358
2022	649

E-Application Requests

Year	Progress
2021	455
2022	2,478

Commercial Auto-Approvals

Year	Progress
2021	5,072
2022	47,904

Integration Solutions

Integrations proved to be extremely successful in 2022, providing powerful connections that allow for seamless transactions. Merchants agency integrations allow agents to send bond orders directly from their website to the Merchants Bonding Company Hub™.

Bond Orders Fulfilled via Integrations

Doubled the Agencies Utilizing Erlon Integration

Automated Renewal Processing for California Contractor License Bonds

Merchants’ integration with the California State Contractors License Board provides an industry-leading level of service for issuing and electronically filing Contractor License Bonds (CLB).

New Premium for CA CLB

Year	Progress
2021	$49,202
2022	$881,517

Total Premium for CA CLB

Year	Progress
2021	$92,764
2022	$991,879

Modernized Accounting Systems

In 2022 Merchants completed the migration of accounting from a legacy system to a web environment, making it possible to:

Enhance reporting and visibility

Consolidate and integrate functionality

Commitment to Quality Assurance

Merchants’ error ratio has decreased 85% since 2017. This achievement highlights Merchants’ commitment to consistency, accuracy and regulatory compliance of our core processes.

Error Ratio

Inclusive Culture That Inspires

Diversity, equity, and inclusion (DEI) bring value to any organization. Merchants intentionally weaves DEI through the fabric of our culture so it’s reflected in our interactions, benefits, programming, and policies.

Paid DEI holiday off

Reviewed language to ensure inclusive vocabulary in internal and external assets

Associate engagement campaigns focused on a range of topics from inspiring women to veterans to cultural celebrations

DEI Education

Merchants introduced 41 new opportunities that allowed associates to attend, learn and engage with DEI topics; from self-guided studies to in-person events.

Honoring Indigenous Peoples

Supporting Women-owned Businesses

Hosting International Visitors for Cultural Awareness

Redlining and Climate Change Presentation

Celebrating Asian Pacific American Heritage Month

DEI Awards

Honoring Native American Day

Juneteenth Recognition

LGBTQ 101 Presentation

Cinco de Mayo Celebration

First Class Experience

Continued investments in the award-winning Hub™ make the connection between Merchants and agencies more secure, more efficient and more powerful.

The Hub provides the power for agencies to:

Create

Update

Reinstate

Renew

Agent Survey Results

Every three years Merchants surveys our agent partners to get a read on our relationship with them. This year's results reflect the input of more than 700 respondents who reported our highest ever ratings and included glowing adjectives like "responsive, quick, and easy" to describe their interactions with Merchants.

Agent Testimonials

"Everyone is always willing and ready to help, able to think outside the box or make agency discretions if needed, the online system is by far the BEST for issuing bonds and renewals. Great people!”

"Merchants has a way of hiring folks who know or are a quick study of the surety business. They make solutions to almost any situation. If it doesn't fit Merchants, they let us know right away. Merchants is one of our go to sureties.”

"Communication is excellent! Being able to call and talk to an underwriter or assistant is an absolute plus for me! Responses are always quick and accurate."

Overall Satisfaction

736 Respondents

Year	Progress
2016	9.15
2019	9.44
2022	9.56

First Class Experience

722 Respondents

Year	Progress
2016	9.11
2019	9.52
2022	9.56

Common Sense Underwriting

848 Respondents

Year	Progress
2016	8.87
2019	9.38
2022	9.09

Relationship Grown Stronger

710 Respondents

Year	Progress
2016	8.38
2019	9.11
2022	9.25

Digital Content Marketing

Digital engagement of contractors and surety-related audiences remained a key marketing strategy in 2022. Leveraging a variety of platforms Merchants garnered in excess of two million views and impressions, an increase of 55%.

Digital Advertising

1,600,000

Impressions

Email Advertising

44,834

Impressions

Social Media

135,472

Impressions

MerchantsBonding.com

236,452

Views

YouTube

7,392

Views

Positive & Collaborative Workplace Culture

Merchants was once again awarded the national certification of Great Place to Work. The certification process captures employee feedback and details about the programs and practices that make Merchants’ workplace unique. Being certified enhances Merchants’ ability to attract and retain top talent. Results of the associate survey confirm our successful efforts to foster a truly welcoming and collaborative workplace.

97 %

Feel Welcomed When They Join the Company

merchants-management-honest-and-ethical-icon

96 %

Proud to Tell Others They Work Here

95 %

Feel Good About Ways Merchants Contributes to the Community

Top 3 Reasons Associates stay with Merchants

The People

Work/Life Balance

The Culture

Merchants’ communications hub connects associates located across the U.S. through company news posts, committee and interest group updates, and photo galleries.

351

Associate News Posts

26,981

Total Post Views

2,229

Reactions

502

Comments

Human Resources in 2022

16.5 %

Associates Promoted

187

Active Associates at Year-end

Positions Recruited and Hired

Develop Potential

Providing growth opportunities for all associates is a key focus for Merchants, and a number of new efforts were launched in 2022 to support that goal.

Training in 2022

385

Training Sessions Completed

73 %

Associates Attended One or More Training Sessions for Development

Underwriting E-Learning Training Program

An increased focus on training for underwriters resulted in new dedicated resources for both Contract and Commercial associates.

Dedicated Trainers Hired

New Courses Created

$ 5,600

Estimated Savings

Internship Experience

Merchants’ award-winning program, developed to support a diverse talent pipeline for the company and the industry, was again recognized as one of the RISE ELITE 50.

intern group jumping in air in celebration